It was Alistair Darling's headline grabber with its guaranteed appeal to "middle England" - freeing the owners of millions of properties from the fear of inheritance tax. At a stroke, he removed the threat from some 2.4m homes worth between £300,000 and £600,000, saving families up to £120,000 each.

The idea is simple. The chancellor changed the rules so that every married person, including those in civil partnerships, will now have a transferable tax-free slice - known technically as the "nil rate band". It's now £300,000 per person - due to rise to £350,000 by the 2010/11 tax year.

Multiply that by two for a couple and you have a far more enticing "free slice" of £600,000 and later £700,000. And what's more, Mr Darling said it would be "back-dated indefinitely" so even someone who became a widow or widower 30 or 40 years ago can benefit.

It was - according to party preference - either a cynical move pilfering the electorally popular clothes of the Conservatives, who had proposed starting the tax at £1m instead of the current £300,000, or a policy combining absolute political genius with positive electoral appeal. But what does it really mean? Here we answer some frequently asked questions about the new world of inheritance tax (IHT).

What does it mean in practice?

Currently, everybody is entitled to a £300,000 allowance for IHT, and married couples can transfer limitless amounts of property or other assets without tax charges when the first dies. When the surviving spouse dies, he or she has the one £300,000 IHT allowance. What Mr Darling said was that married couples and civil partners can now use the leftover allowance of their deceased partner, effectively raising the threshold to £600,000.

Who will benefit from the move?

Anyone who is now either in a marriage or civil partnership or who is a widow or widower. It does not matter how long ago the person's spouse or civil partner died.

And who is excluded?

Single people continue to get one £300,000 allowance. And couples, whether same or different sex, who are not in a civil partnership or married will see no change. The new rules do not apply to siblings who live together.

I was divorced 10 years ago and the home I got from the settlement is now worth £550,000. Do I qualify for a £600,000 allowance?

No. Once you divorce, you are treated as a single person whether or not your ex-spouse is alive or dead. But if you re-marry (a new person or even a former partner), then the surviving partner will have the double allowance on death.

My husband died 20 years ago. How does the backdating apply to me?

Patrick Stevens at accountants Ernst & Young explains: "It does not matter how long ago the first partner died, even if that is before the creation of inheritance tax in 1984.

"What counts is when the survivor dies. On that date, the estate will benefit from a double allowance at the rate then in force - not the rate when the first partner died.

"This assumes, however, that the first to die did not use her or his allowance. If they did, then there is only one tax-free slice left. Some may have used part of the allowance. Someone who died in a year when the allowance was £200,000 and used £100,000 would have half an allowance left. So, today the estate of the second to die would get £150,000 - half of today's £300,000."

Both my parents died five years ago. IHT was payable on the estate. Can I benefit from backdating?

No. The backdating only applies if there is a spouse still living - it does not apply to children or other family members.

Should I leave everything to my spouse/civil partner?

Those whose main wealth is their home have little choice - unless they want to force their widow/widower to move out and downsize. But where there is cash, it also makes sense. Leaving all the money could make the survivor's life more comfortable. Where cash could be left to children, grandchildren or friends, it is better to leave it to the spouse with instructions to distribute it.

According to Peter Harrup at accountants PKF, provided the survivor lives seven years after making the gifts, they escape the IHT net. "This not only creates another free slice but it will also be at whatever the future rate is - and that will be more than now."

Bequests to charities are an exception. These are always IHT-free.

And, of course, you have to trust your partner to carry out your wishes after your death.

We already have a trust set up for IHT purposes. What shall we do?

Trusts will continue to be useful for some large estates. But trusts come with dangers - they can allow children to throw a surviving parent out of their home. Many people will have set up "nil rate band discretionary trusts" to minimise their IHT liabilities.

George Bull, head of tax at Baker Tilly says: "Transferable exemptions mean that nil-rate trusts no longer have a purpose. With trusts under continuing tax pressure in the UK, people who have just reviewed their wills after the last tax changes may have to start all over again."

Wills should be regularly revised to take care of changing circumstances such as a new addition to the family.

How the big idea went down with you

Toni McDermott, 33, a working mother of two, said: "It makes me really cross. I think it's the worst thing in the world! I used to be a Labour supporter, but now I applaud the Tories for striving to reduce our tax burden and they are starting with the most unfair taxes."

Ed Walker, a 26-year-old student in Oxford said: "It's fairly progressive because it affects the rich not the poor . . . but raising it a bit would be a good idea."

Malachy Comac, 46, a builder living in London said: "It seems like the government have got you everywhere, even when you are dead you are still paying. I'm against it because if you worked hard for your house you can't pass all that on."

John Villeneau, 41, a solicitor, said he is caught in "a dilemma between socialism and selfishness . . . there's also a social responsibility to pay tax."

June Bulgin, 73, from Bromley said inheritance tax had never been a big concern for her. "As I am going to be dead when it's paid, I'm not too bothered, to be honest."

Interviews by Angela Symons

· Guardian Money has written a new guide to inheritance tax. It includes details of the changes announced in this week's pre-budget report and also tells you how to plan ahead to keep any tax your family might pay to a minimum. It's free - just call 0845 630 3191. Copies will be sent out within 10 days but there may be some delays as they are posted. The guide is sponsored by a financial services company.